It is not easy to find a topic where the majority of traders agree, but when it comes to keeping a trading journal, every trader knows that it is almost impossible to become profitable without journaling your trades. However, most traders do not follow a good journaling routine and give up quickly because they don’t see the benefits of having a trading journal. We identified the main reasons why conventional trading journals are not improving your trading and what a good trading journal does for you.

Why a conventional trading journal won’t help you become a better trader

Almost every trading mentor, blog or forum offers some sort of trading journal. But usually they come as a simple, plain spreadsheet that does not only look like it’s going to be a very dull and frustrating way to enter your trades, these trading journals usually do not provide valuable information on how you can improve your performance.

Therefore, the main reasons why most traders give up on journaling trades is because conventional trading journals provide a very boring and frustrating experience, while completely missing the point and not providing helpful tips how to become a better trader.

Without keeping track of what you do, you will never know why you lose money

Although most brokers provide the possibility to review your track record, this only scratches the surface. You don’t need someone telling you whether you are losing or making money; you can figure this out yourself very easily.

A good trading journal provides information WHY you are losing money. It analyses your trading behavior and your trade management decisions and then finds out what is causing you to lose money; a trading journal should be your personal trading mentor.

“The only way you get a real education in the market is to invest cash, track your trade, and study your mistakes.” – Jesse Livermore

How a trading journal can increase your performance

Traders often do not know that they are much closer to becoming a profitable trader than they think. Often, increasing trading performance is just a matter of changing a few simple things. Typical mistakes that cost traders a lot of money and that are easy to fix are:

You set your stop loss and/or take profit orders too far away and reduce your overall risk reward ratio and therefore, the performance of your trading overall?
Tracking and evaluating how you place your orders and finding ways to improve your trade-placement is the first step towards improving your performance.

Your entries are good but you move around stop loss and take profit orders in a way that is costing you money?
Analyzing your trade management decisions and how it impacts your performance is more advanced but wrong trade management is a main reason why traders lose money.

You are a good trader but you consistently lose money on certain setups, instruments, or a combination of both?
A trading journal that is customizable to your own strategies and setups allows you to specifically track your own trading data. A personalized trading journal allows you to find exactly those trades where you lose money consistently.

Emotions and psychology is interfering with your trading decisions?
Traders know that emotions and psychology are very important, but what is it actually doing to your performance? Analyzing the impacts of certain emotions such as greed, fear or hope, and visualizing the influence on your trading account can help you find and eliminate negative trade patterns easily.

Looking at all the points, it seems like an almost impossible task for a trading journal to take care of. But only if your trading journal can solve these problems for you, it is worth having a trading journal in the first place. Therefore, tracking the right data and putting it together in a meaningful way is critical for a trading journal and another reason why self-made spreadsheets will not help you find your edge and only make journaling a frustrating and pointless activity.

Conclusion: Keeping a professional trading journal is a must for every trader

As you can see, having a trading journal should not be an option but something that you include into your daily trading routine. If you don’t keep track of what you are doing as a trader, how can you find ways to lose fewer trades and make more money? Or do you still believe that you will stumble over the secret trading method that will suddenly make you a better trader? Keeping a professional trading journal is surely the easier and safer way towards a profitable trading career.

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About the Author

My Name is Rolf, I got involved with trading almost a decade ago and have never stopped being fascinated by the markets since. I have a strong academic background and graduated with a Master of Science in Quantitative and International Finance a few years back. I started my Blog Tradeciety, where I enjoy challenging common trading wisdom and providing a simple and different view on the trading business. I started my blog because trading can be a monotone and lonely profession sometimes and I like to connect with other traders. I love to talk trading! Visit Tradeciety
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